Another round of oil price hike likely by month-end

Ahead of assembly elections in four states, the government may manage to hold back an increase in diesel and cooking gas prices, but is unlikely to postpone a hike in the prices of petrol, a fuel that stands de-regulated.

State-owned oil companies, led by Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum, could announce an increase in petrol prices by month-end, a senior oil company official said.

Sources in the oil companies said the hike could be between Rs2 and Rs3 a litre. It may be announced after the Parliament session, expected to end on March 25.

The officer said despite high global crude prices, they couldn’t announce a hike. They were told it could create a panic among consumers, already battling inflation. He, however, said on the back of high crude prices, a hike in fuel prices, especially petrol, had become “absolutely necessary”.

Fearing a political fallout, the government may not agree to increase the prices of cooking gas and diesel. “These two fuels may be left untouched at least till the elections,” he said.

The crisis in West Asia and nearby areas has pushed up crude prices, a major concern for oil importing countries like India.

Global crude prices continue to be high at around $110 (Rs4,950) a barrel even as they have come down slightly from the recent highs of $116 per barrel, the highest since 2008.

Oil companies had increased the petrol prices by Rs2.50-Rs2.54 a litre on January 15.

Asked if the government was delaying the petrol price hike, a senior petroleum ministry official said, “There is no plan to regulate petrol prices now, but there is a provision that if prices go to astronomically high levels then the government may intervene.”

Petrol prices in the country are market-linked, but diesel, cooking gas and kerosene rates are set by the government, which partly compensates state firms for the losses when global crude prices go up.